Press Release:
— Consolidated non-GAAP earnings per diluted share increased by 38% to $0.22 in the third quarter of 2010 from $0.16 consolidated earnings per diluted share in the third quarter of 2009
— Consolidated same store sales increased 5.1%, better than the previously estimated increase of 1 to 2%
— Full year estimates raised to $1.56 – 1.58 to reflect anticipated consolidated non-GAAP earnings per diluted share growth of 30 to 32% from 2009 consolidated non-GAAP earnings per diluted share of $1.20
PITTSBURGH, Nov. 16, 2010 /PRNewswire-FirstCall/ — Dick’s Sporting Goods, Inc. (NYSE:DKS – News) today reported sales and earnings results for the third quarter ended October 30, 2010.
Third Quarter Results
The Company reported consolidated non-GAAP net income for the third quarter ended October 30, 2010 of $26.7 million, or $0.22 per diluted share, excluding an $0.08 per diluted share impact from Golf Galaxy store closure costs. On a GAAP basis, the Company reported consolidated net income for the third quarter ended October 30, 2010 of $16.9 million, or $0.14 per diluted share. The GAAP to non-GAAP reconciliation is included in a table later in the release under the heading “Non-GAAP Net Income and Earnings Per Share Reconciliation.”
The third quarter consolidated non-GAAP earnings per diluted share exceeded estimated earnings expectations provided on August 19, 2010 of $0.15 – 0.16 per diluted share. For the third quarter ended October 31, 2009, the Company reported consolidated net income of $18.9 million, or $0.16 per diluted share.
Net sales for the third quarter of 2010 increased by 9.0% from the third quarter of 2009 to $1,079.0 million due primarily to a 5.1% increase in consolidated same store sales and the opening of new stores. The 5.1% consolidated same store sales increase consisted of a 3.8% increase in Dick’s Sporting Goods stores, a 2.4% increase in Golf Galaxy and an 82.4% increase in e-commerce.
“We are encouraged by our third quarter performance and our continued progress in driving profitable growth. As a result, we have raised our earnings expectations for the fourth quarter and full year 2010,” said Edward W. Stack, Chairman and CEO. “We are also increasingly optimistic about our future growth opportunities, including the potential to more than double our network of Dick’s Sporting Goods stores and to fuel the growth of our Golf Galaxy and e-commerce businesses, while continuing to drive margin expansion and deliver long-term shareholder value.”
Stores
In the third quarter, the Company opened 12 new Dick’s Sporting Goods stores, remodeled eight Dick’s Sporting Goods stores, relocated one Dick’s Sporting Goods store and closed 12 underperforming Golf Galaxy stores. The new stores are listed in a table later in the release under the heading “Store Count and Square Footage.”
In the first three quarters of 2010, the Company opened 18 new Dick’s Sporting Goods stores, remodeled 11 Dick’s Sporting Goods stores, relocated one Dick’s Sporting Goods store and closed 12 underperforming Golf Galaxy stores. As of October 30, 2010, the Company operated 437 Dick’s Sporting Goods stores in 42 states, with approximately 24.3 million square feet, and 79 Golf Galaxy stores in 29 states, with approximately 1.3 million square feet.
Balance Sheet
The Company ended the third quarter of 2010 with $159 million in cash and cash equivalents and did not have any outstanding borrowings under its $440 million revolving credit facility. At the end of the third quarter of 2009, the Company had $40 million in cash and cash equivalents and $63 million of outstanding borrowings under its credit facility.
The inventory per square foot was 2.5% higher at the end of the third quarter 2010 as compared to the end of the third quarter 2009.
Year-to-Date Results
The Company reported consolidated non-GAAP net income for the 39 weeks ended October 30, 2010 of $104.4 million, or $0.86 per diluted share, which excludes an $0.08 per diluted share impact from Golf Galaxy store closure costs. For the 39 weeks ended October 31, 2009, the Company reported consolidated non-GAAP net income of $74.1 million, or $0.63 per diluted share, which excluded merger and integration costs. On a GAAP basis, the Company reported consolidated net income for the 39 weeks ended October 30, 2010 of $94.6 million or $0.78 per diluted share compared to net income for the 39 weeks ended October 31, 2009 of $68.0 million, or $0.58 per diluted share.
Net sales through the third quarter of 2010 increased 9.0% from the same period in 2009 to $3,352.6 million primarily due to a consolidated same store sales increase of 6.2 % and the opening of new stores.
2010 Outlook
The Company’s outlook for 2010 is based on current expectations and includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act as described later in this release. Although the Company believes that comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.
Based on year-to-date results and expectations for the fourth quarter, the Company is raising its annual consolidated non-GAAP earnings estimate and increasing the expected consolidated same store sales for 2010.
Full Year 2010
Based on an estimated 121 million diluted shares outstanding, the Company currently anticipates reporting consolidated non-GAAP earnings per diluted share of approximately $1.56 – 1.58, excluding an $0.08 per diluted share impact from Golf Galaxy store closures. For the full year 2009, the Company reported consolidated non-GAAP earnings per diluted share of $1.20, excluding merger and integration costs. On a GAAP basis, the Company reported consolidated earnings per diluted share of $1.15 in 2009.
Consolidated same store sales are currently expected to increase approximately 4.5 to 5.5% compared to a 1.4% decrease in 2009. The consolidated same store sales calculation for the full year 2010 includes Dick’s Sporting Goods stores, Golf Galaxy stores and the Company’s e-commerce business. The consolidated same store sales calculation for the full year 2009 included Dick’s Sporting Goods stores and Golf Galaxy stores only.
The Company expects to open 26 new Dick’s Sporting Goods stores, remodel 12 Dick’s Sporting Goods stores, relocate two Dick’s Sporting Goods stores, open two new Golf Galaxy stores and close 12 underperforming Golf Galaxy stores.
Fourth Quarter 2010
Based on an estimated 122 million diluted shares outstanding, the Company currently expects reporting fourth quarter consolidated earnings per diluted share of approximately $0.69 – 0.71. In the fourth quarter of 2009, the Company reported consolidated earnings per diluted share of $0.56.
Consolidated same store sales are currently expected to increase approximately 3 to 4% compared to a 2.5% increase in the fourth quarter last year. The consolidated same store sales calculation for the fourth quarter of 2010 includes Dick’s Sporting Goods stores, Golf Galaxy stores, the converted Chick’s Sporting Goods stores and the Company’s e-commerce business.
The consolidated same store sales calculation for the fourth quarter of 2009 included Dick’s Sporting Goods stores and Golf Galaxy stores only.
The Company expects to open eight new Dick’s Sporting Goods stores, remodel one Dick’s Sporting Goods store, relocate one Dick’s Sporting Goods store and open two Golf Galaxy stores in the fourth quarter.
Capital Expenditures
For the full year 2010, the Company currently anticipates capital expenditures to be approximately $175 million on a gross basis and approximately $145 million on a net basis.
Conference Call Info
The Company will be hosting a conference call today at 10:00 a.m. eastern time to discuss the third quarter results. Investors will have the opportunity to listen to the earnings conference call over the internet through the Company’s web site located at https://www.dickssportinggoods.com/investors. To listen to the live call, please go to the web site at least fifteen minutes early to register and download and install any necessary audio software.
For those who cannot listen to the live webcast, it will be archived on the Company’s web site for 30 days. In addition, a dial-in replay will be available shortly after the call. To listen to the replay, investors should dial 888-286-8010 (domestic callers) or 617-801-6888 (international callers) and enter confirmation code 10090033. The dial-in replay will be available for 30 days following the live call.
